The Ethanol Bubble Pops in Iowa: More evidence the fuel makes little economic sense.

The Wall Street Journal ^ | April 18, 2009 | Max Schulz

[Cboldt]

-- big ag is now reflexively statist --

They have to be to survive short term. The ag business is entirely run by the federal government. IOW, as far as Ag goes, we have been communist for about a generation.

[anglian]

Bioethanol's Impact On Water Supply Three Times Higher Than Once Thought ScienceDaily (Apr. 13, 2009) — At a time when water supplies are scarce in many areas of the United States, scientists in Minnesota are reporting that production of bioethanol — often regarded as the clean-burning energy source of the future — may consume up to three times more water than previously thought. Annual bioethanol production in the U.S. is currently about 9 billion gallons and note that experts expect it to increase in the near future. The growing demand for bioethanol, particularly corn-based ethanol, has sparked significant concerns among researchers about its impact on water availability. Previous studies estimated that a gallon of corn-based bioethanol requires the use of 263 to 784 gallons of water from the farm to the fuel pump. But these estimates failed to account for widely varied regional irrigation practices, the scientists say. The scientists made a new estimate of bioethanol's impact on the water supply using detailed irrigation data from 41 states. They found that bioethanol's water requirements can be as high as 861 billion gallons of water from the corn field to the fuel pump in 2007. And a gallon of ethanol may require up to over 2,100 gallons of water from farm to fuel pump, depending on the regional irrigation practice in growing corn. However, a dozen states in the Corn Belt consume less than 100 gallons of water per gallon of ethanol, making them better suited for ethanol production. http://www.sciencedaily.com/releases/2009/04/090413102225.htm

[Scanian]

They’ll only get it when they finally kill their golden goose. And I think I hear her starting to honk.

[Toddsterpatriot]

So, if all the gasoline now sold contains 10% ethanol, and it does here, is the price per gallon higher or lower because of the inclusion of subsidized ethanol?

Looks like May ethanol prices are about $1.57 per gallon versus $1.49 for RBOB gas. If you add the extra expense to transport the ethanol as well as the 51 cent blenders credit on top of the lower energy per gallon of ethanol, the cash price is a little higher per gallon and even higher when measured per mile traveled. And you might as well flush the subsidy down the toilet.

[Citizen Tom Paine]

I'll bet you $1 that ethanol made many a millionaire using Taxpayers dollars. When the house started to collapse, they bailed, and now they are sucking on the public teat on some other hair-brained program.

The other consequence is how many politicians did methanol get elected over the years. The people that tried to talk sense to the public weren't elected.

[niteowl77]

IOW, as far as Ag goes, we have been communist for about a generation.

The true harvest of people like Henry Wallace and Roswell Garst.

Mr. niteowl77

[anglian]

LoL. Here is the cherry on top. - “A Bipartisan Group of US Senators Calls on EPA to Refrain From Including Indirect Land Use Change in Biofuel Regulations”
17 March 2009 A bipartisan group of 12 US senators led by Tom Harkin (D-IA) and Chuck Grassley (R-IA) has called on the Environmental Protection Agency (EPA) not to include calculations of indirect land use change (ILUC) effects as contributors to life-cycle greenhouse gas (GHG) emissions for biofuels in the upcoming rulemaking for implementation of the updated Renewable Fuels Standard (RFS-2) enacted in the Energy Independence and Security Act (EISA) of 2007.

The Renewable Fuel Standard (RFS-2) defined within the Energy Independence and Security Act of 2007 requires biofuels to meet specified life-cycle greenhouse gas emission reduction targets to qualify. The law specifies that life-cycle GHG emissions are to include “direct emissions and significant indirect emissions such as significant emissions from land use changes, as determined by the Administrator.”

Depending upon the assumptions and boundary conditions set in the ILUC evaluation, the result can dramatically increase the calculated GHG footprint of a biofuel, far offsetting the presumed greenhouse gas benefits of its use.
http://www.greencarcongress.com/2009/03/bipartisan-group-of-us-senators-calls-on-epa-to-refrain-from-including-indirect-land-use-change-in-b.html

[D-fendr]

Mother Market loves bailouts and stiumulus.

Only if you think high inflation is a loving mother's gift.

Mother Market appears to have been bought and paid for by the democrats.

No, no, no. Government is democrats; Mother Market does as She does irrespective of whose hand does the tilling - or the burning.

[RipSawyer]

“When we, the people, elected these awful buffoons in Congress over the past decades, we signed up for the bail outs.”
////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////

Yep, people keep voting for these nutcases when we could pick a name from the phonebook and probably do better.

[DB]

That “transfer of wealth” is going to destroy wealth, not just transfer it keeping the total the same. Money is a tool. Generally those who have it know how to use it to produce more wealth. Those who do not know how to use it squander it and produce little with it. Therefore when you take the tools away from people who are productive and give it to those who are not, less is produced and everyone becomes poorer over time.

[Iron Munro]

That “transfer of wealth” is going to destroy wealth, not just transfer it keeping the total the same.

Good point.

[momincombatboots]

The numbers do not lie, Every time there was a bailout announced, the market jumped up. It did not make sense to me because everyone knew bailouts have consequences. If the market was not fixed it would have tanked with the jobs data. I understands banks are and were in serious trouble, but a truly free market would be afraid of government intervention. My only conclusion is, it has been rigged. It dropped rather precipitously, we had a “crisis”, now suddenly it’s all better now. That does not even make sense. Every time there was a negative report it dropped, until last week? I understand some firms are reporting profits,gee, that’s kinda quick. I am not an economist, armchair or otherwise, but I see some serious inconsistencies that scream “Rigged!”

[Lonesome in Massachussets]

I think we may have some semantic confusion, between “free markets” (think Main Street) and the shares market (Wall Street). The shares market, short term, is extremely sensitive to preceptions and fears. Long term, the shares market judges results. The government can influence both short term perceptions and fears and long term results.

The government has grotesquely distorted the free market by providing perverse incentives to favored activities, which may or may not help the long term health of the economy and the Republic. One example is subsidizing higher education. I, for one, think the obscenely bloated education establishment has had a distinctly negative effect on the economy, on public comity and political cohesion. (’An idea so stupid only an intellectual could believe it.’)

The dreadful effect of Fannie Mae and Fannie Mac on the housing market is now becoming painfully apparent. It will take at least a generation to recover.

[momincombatboots]

Thanks, that was a helpful way to look at it, because it seems illogical.

[newgeezer]

22 bushels of corn to produce 1 gallon of ethanol,corn juice not a good idea.

Huh? According to the article, "the Dyersville plant could process 39 million bushels of corn and produce 110 million gallons of ethanol annually." Seems to me that's almost 3 gallons of hooch from every bushel of corn.

[hubel458]

This whole debate of you folks beating on ethanol,
and stupid NY writers beating on it, is tiresome.
A few ethanal companies have to re-organize and
we get crap stories that the whole thing is failing.
That is silly considering that over a 100 plants are
doing ok, when compared to our auto industry,where 2/3
are ready to go under.

First of all, farmers get no subsidy as corn prices are
above the price support limit.The oil companies will
get about a 5 billion dollar tax credit for blending
in ethanol. But the oil companies get tax credits
on about everything they do and the blenders credit is
like 5% of all the credits oil companies get.
And it is a drop in the bucket compared to the bailouts.
Some oil companies are buying ethanol plants as it
adds to the supply which puts a down pressure on the
prices. Before ethanol, gas was higher than diesel as it
took more to refine it, But having the billions of gal
of ethanol, which during the high price time was way over
a dollar less than gas, has kept the prices down
compared to not having it. Over the years it has saved
consumers at the gas pump, the equivalent of the 5 billion
tax credit, every two weeks. That’s 100 billion a year.

As far as ethanol plants— the stupids that figure out
the cost benefits all forget the huge value of processed
high protein feed that is basic output of these plants.
With dollar value of twice that of ethanol, which
in reality is a by-product. And the only reason for
financial problems of the plants, isn’t the crap being
being bandied about ethanol, but the high price the
plants had to pay for the corn the last couple years.
Said high price driven crazy, by high oil/energy costs
and the speculators screwing around in the corn
market.Well the speculators are busted, corn about half
of its high, other inputs at the farm slowly getting
back on an even keel, and the plants will still
put about 10-12 billion gals of fuel out, helping
to keep prices a little lower.And less money going
overseas to terrorists. Ed

[Toddsterpatriot]

First of all, farmers get no subsidy as corn prices are above the price support limit.

Excellent! Then farmers won't mind if we eliminated the subsidy and the ethanol mandates.

The oil companies will get about a 5 billion dollar tax credit

Farmers shouldn't mind eliminating that. If ethanol makes economic sense, it's not needed.

And it is a drop in the bucket compared to the bailouts.

Obama?

Over the years it has saved consumers at the gas pump, the equivalent of the 5 billion tax credit, every two weeks. That’s 100 billion a year.

Layoff the corn squeezins. Or at least prove your math.

As far as ethanol plants— the stupids that figure out the cost benefits all forget the huge value of processed high protein feed that is basic output of these plants.

Is that why this plant was closed? Because they forgot about the protein?

And the only reason for financial problems of the plants, isn’t the crap being being bandied about ethanol, but the high price the plants had to pay for the corn the last couple years.

The high price had nothing to do with ethanol. LOL!

Well the speculators are busted, corn about half of its high, other inputs at the farm slowly getting back on an even keel, and the plants will still put about 10-12 billion gals of fuel out, helping to keep prices a little lower.And less money going overseas to terrorists. Ed

I'm all for less imports and less money going to terrorists. In the Middle East and in the Midwest.

[hubel458]

Hey man what is your problem, You work for the
Grocers Alliance, who started this anti-ethanol
campaign last year. Same bunch who got a gaggle
NY writers to trash ethanol, said financial writers
now upset that the speculators can’t make a killing
and have you people blame it on farmers with your
attitude. Farmers here don’t want oil companies to
get tax credit as it causes you folks to beat on them.
That tax credit wasn’t the idea of farmers here.
And Congress is reducing the credit a little every year.
And that plant didn’t forget the feed it was going to
make. It was a plant just getting set up and going,
with big bills and high corn prices to have to
fight, while getting started.And they were in a bind.
They will probably going later as others have,
that got reorganized.

And my math is ok, as the savings is actually higher,
over the 100 billion a year than the round figure I
gave......I like round figures.....44 Triple Ds.

And The high corn price did effect the profit a
plant made. 7 dollar corn vs 3 1/2 dollar corn as
it is now, is a big cost factor, be like a car
company paying its help twice as much, and
paying twice as much for parts and still trying
to sell the car for same price.

And the speculators had all commodities up
so that the price the Grocers Alliance folks had to pay
was up, as well as the energy cost they had for
processing and delivery. So what did they do.....try
to blame all on ethanol/farmers. Instead of the people, speculators, who raised the prices. And now that
commodities are down; milk, meat, etc are down the Grocers
Alliance raised prices of other stuff in the store like
pop, detergent, etc. Every type of stuff in a market
is made by a member, even though it isn’t food.
They are trying to deflect their problems and greed
onto the back of the farmers....Ed

[Toddsterpatriot]

Hey man what is your problem,

I don't like wasteful government programs and I have a good grasp of economics and physics. What's your problem?

You work for the Grocers Alliance,

No.

That tax credit wasn’t the idea of farmers here.

What was the idea of farmers there? The ethanol mandates?

And my math is ok, as the savings is actually higher, over the 100 billion a year than the round figure I gave...

Show me.

[hubel458]

The ethanol mandates put up to 10% now into fuel
as it is an oxygen carrier which aids in cleaner burn
and less harmful smog type emissions. 40 years ago I
couldn’t drive in Detroit without my asthma going crazy.
Now the air there is nearly as clean as here in outstate
MI. All my V8s burn cleaner, run better,
get same or better milage on 10% mix.

If gas was as high as diesel, like years ago,
the 50 cents or more per gallon difference added on the
approximate 250 billion gallons pump gas used yearly
would add 125 billion to come out of consumers
pockets. Fair trade for a tax credit of 5 billion.
That is tax credit, not money paid out like bailouts,
child EIC payments,etc.

Just the fact that there are tankcars that set waiting to
add to supply helps keep prices down. If we had all offshore fields going, had all coal shale going, had
oil/gas lines from Alaska to here—— the pressure on
prices would give us 69 cent gas. Ethanol is one little
factor that helps..........But that is the
problem for the financial , big wall street sectors
is energy has to be thought of in short supply, as
that drives prices crazy,which drives all other prices
and business up, thus increasing credit/money supply.
So they conjure up the ethanol demon, knowing most are
small guys , most are farm co-op owned, and most are
rural and if shafted don’t affect wallstreet minions.
Those making money pushing the funny paper around
to rip us off....Like speculators.Ed